29/05/2002 12:24:53 Adds to Tax Revenue & Regional Economy
TIMBERCORP LIMITED 2002-05-29 ASX-SIGNAL-G
HOMEX - Melbourne
+++++++++++++++++++++++++ Eucalypt, olive and almond plantations developed by Timbercorp Limited are producing significant Government tax revenue and benefits to Australia's regional economy, according to an analysis by Access Economics released today.
Timbercorp, Australia's largest agribusiness investment manager, commissioned Access to report on the economic impact of the company's operations.
"We wanted a demonstrably independent and authoritative analyst to define for government, investment markets and the general public what we believed to be true," Timbercorp chief executive Mr Robert Hance said.
"The Access examination, importantly, confirms that the money investors subscribe to Timbercorp prospectuses goes into the ground and is being managed for the long term to produce returns from sales ofwoodchips, olive oil and almonds.
"Properly managed, tax-effective investment, as offered by Timbercorp, is an effective method of financing large-scale agricultural development by transferring largely city-based funds to rural areas and, far from being a drag on tax revenues, such investment over time has a substantial positive impact."
Key findings of the Access report include:
* From 2007 onwards, about 10 million tonnes of woodchips from Timbercorp's more than 40,000 hectares of plantations in the Green Triangle region of South-west Victoria/south-east South Australia are projected to have an export value of more than $800 million. Total expenditure on harvesting, processing and transport may total well over $400 million at today's prices. The balance of Timbercorp's 25,000 ha plantation estate in Western Australia will have a similar impact.
* At maturity, the olive grove at Boort in central Victoria is projected to make direct contributions of nearly $50 million annually to GDP and around $80 million to Australia's trade balance. In addition, the project's expenditures will be supporting employment and providing business opportunities in the Loddon-Murray region.
* Sustainable timber plantations are more labour-intensive than many other land uses and there is comparatively high unemployment and underutilisation of labour in regional Australia. The olive grove is situated in an area with high structural unemployment and uses land that had less value in its alternative use.
* Investment in long-lived agribusiness projects is more likely to provide a positive economic return if a high proportion of investors' funds is used to establish and operate the business. Over the four years to 30 June 2001, Timbercorp has spent on the purchase of assets, plantation establishment and operation, the equivalent of all the funds raised from investors.
* Grower expenditures incurred in advance of assessable income that are immediately deductible to growers are immediately assessable as income for Timbercorp.
* The net present value (NPV) of tax revenue generated from the eucalypt estate over an 11-year rotation is estimated to total $189 million ($2,520/ha). NPV of tax revenue at maturity of the olive grove over the 24-year horizon is estimated at $249.6 million ($71,310/ha).
Mr Hance said the Access report represented a valuable addition to the debate on thevalue of agribusiness tax-effective investment - a debate notable for heat, controversy and a paucity of objective economic analysis.
"We believe this work will show that blanket criticism of this method of funding agricultural investment is unjustified. The debate really should be about the effectiveness of management and grower returns," Mr Hance said.
"Timbercorp is happy to be assessed on that basis".
For further information, contact:
Robert Hance, Chief Executive Officer, Timbercorp Telephone: (03) 8615 1200 or 0417 887 551
Sol Rabinowicz, Executive Director, Timbercorp Telephone: (03) 8615 1200 or 0417 887 552
Or refer to the Timbercorp website: www.timbercorp.com.au for a full copy of the report.
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